Understanding the requirements and expectations of finance providers is essential for Early Stage businesses. These should be clearly identified to avoid any misunderstanding between parties.
The importance of business plans for funding
Your business plan should identify your business’s funding requirements and how these will be repaid. The business plan should also identify how the early stage business will use the funds. At the early stage, equity funding rather than debt is more likely to be available.
Terms and conditions
At the early stage, equity funding is likely to be more readily available than debt funding. Traditionally, equity funding is more expensive.
It is vital that early stage businesses carefully understand the terms on which funding is provided, regardless of the source.
The investor perspective
When providers of finance (be that equity or debt) invest in an early stage business, they are buying into the management team and the ability of the business to protect their investment. It is important to bear this in mind when seeking funding.